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Smart metering for households: cost and benefits for Netherlands

Eric Salviac
Eric Salviac

The document summarizes a study on the costs and benefits of implementing smart metering for households in the Netherlands. The study found that smart metering would have a positive net present value of over 1 billion euros, bringing cost savings through more efficient outage handling, fraud detection, and reduced calls and meter readings, while enabling consumer energy savings and more competitive energy prices. However, the benefits for individual households would be small. Market players were generally favorable towards large-scale rollout, but had differing views on issues like open versus closed meter markets. The ministry was preparing an agreement on a transition plan to implement smart meters.

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Smart Metering for Households: Cost and Benefits for the Netherlands Hans-Paul Siderius SenterNovem, The Netherlands 1
Overview of presentation Policy background: Energy Services Directive article 13 SenterNovem study on costs and benefits smart metering: Standardization Cost Benefit analysis Market Consultation Conclusion and discussion, including: Some developments in the Dutch energy market relevant for metering. IEE project ESMA.
Policy background Energy Services Directive (2006/32/EC), article 13(1): Member States shall ensure that, in so far it is technically possible, financially reasonable and proportionate in relation to the potential energy savings final customers are provided with competitively priced individual meters that accurately reflect the final customers actual energy consumption and that provide information on actual time of use.
Goal and set-up of SenterNovem study Cost benefit analysis of large scale introduction of smart metering for residential customers in the Netherlands. 3 parts: Study on standardisation smart metering (by NEN) Cost benefit analysis of large scale introduction smart metering (by KEMA) Consultation market players (by SenterNovem)
What is a smart meter? woning display display trim consumption loggen logging 1234 1234 1234 1234 verwerken calculation 5678 5678 measurement 5678 5678 aansturen control switch on/off modem modem Electricity Gas
Specifications smart meter Counter (kWh) Logging consumption and return delivery (PV!) per period Outages Internal clock 2 way communications Automatic meter reading (standard format) Switch on switch off possibility on distance Standard output for data
Standardisation: conclusions Standardisation is essential, but NOT the only condition for large scale introduction of smart metering Good support by market players Incentive necessary from government as regulator: Definition of functionality smart meters (market will introduce standardisation)
Cost benefit analys: base case and target case Base case Nulsituatie handmatige handheld handheld verwerking handmatige processing processing verwerking Database: standaard conventional meter -netoperator meter -supplier Target case woning display display kWh,m3, kWh, m3, netoperator Interface, Interface, smart gateway Database measuring measuring supplier meter protocol protocol
Cost benefit analysis: result + 1,2 billion EUR Efficientere storingsafhandeling door slimme meter E Snellere storingsmelding door slimme meter E Effectievere aanpak wanbetalers door slimme meter G Effectievere aanpak wanbetalers door slimme meter E Snellere detectie van fraude E-meters (stroomdiefstal) Verschuiving elektriciteitsverbruik door vraagresponse Makkelijker switchen leidt tot meer concurrentie en prijsdaling G Makkelijker switchen leidt tot meer concurrentie en prijsdaling E Maandelijkse facturering energieverbruik door leverancier Effici谷nt verloop switchproces door betere meterstanden G Effici谷nt verloop switchproces door betere meterstanden E Vermindering klachten G via call center Vermindering klachten E via call center Besparing kosten jaarlijkse bepaling meterstanden Besparing kosten fysiek meteropnemen E+G Zuiniger gedrag bewoners t.a.v. gasverbruik Zuiniger gedrag bewoners t.a.v. elektriciteitsverbruik Inrichting infra t.b.v. terugkoppeling meetdata naar verbruikers Inrichten datacentra voor meetdata Inrichten data-infrastructuur via ADSL of kabel Inrichten data-infrastructuur via GSM/GPRS -60 -50 -40 -30 -20 -10 0 100 200 300 400 500 600 700 800 900 100 Inrichten data-infrastructuur via Power Line Communications (PLC) 0 0 0 0 0 0 0 Aanschaf en installatie slimme gasmeters MEURO
Cost benefit analysis: + 1,2 billion EUR most important costs MEUR Purchase and installation smart meters (E+G) 798 Monthly billing energy consumption by supplier 437 Organization the data-infrastructure via PLC/internet/GSM 354 most important benefits MEUR Easier switching more price-competition reduction E+G price 1.353 Less complaining via call center 927
Cost benefit analysis: Who pays, who benefits 4.500 4.000 costs 3.500 benefits 3.000 2.500 MEUR 2.000 1.500 1.000 500 0 s ld t r s r or en lie to e r o ce t ni ra ra eh pp m pa u pe pe rn us su od m ve to o ho pr co gy et ne go ln gy er g rin ca en er en e lo et m
Cost benefit analysis: Sensitivity analysis Transition time (10 years) NPV (in M) 20 years 1.000 5 years 1.400 Meter (100% gas + electricity) Only 100% electricity meters 400 5% electricity - and gas meters 50 Reduction energy price (E -0,0025; G -0,0050) E -0,0010 EUR/kWh; G -0,0020 EUR/m3 414 E -0,0040 EUR/kWh; G -0,0080 EUR/m3 2.037 Data infrastructure (40%PLC, 40% internet, 20%GSM) 100% PLC 1.500 100% internet 1.600 100% GSM 0
Cost benefit analysis: conclusions Net present value is positive, but: social cost/benefit analysis is not equal to a cost/ benefit analysis performed by an individual company Split incentives Benefit for each individual household small Discussion about benefits for households Expected reduction of energy prices? Expected energy savings by feedback?
Market consultation: conclusions Market favourable on large scale introduction of smart metering ESD can be an impulse Definition of minimum requirements smart meters Shared starting points Energy company needs accurate data and on time Energy company prefers independency of net operator Conflicting starting points Open meter market Closed meter market
Conclusions and discussion Smart metering for households has a positive cost-benefit balance. The market is favourable of large scale introduction. Discussion on: Metering market Feedback benefits for households
Development of meter market in NL (1) Smart metering as standard infrastructure Standardisation of reading smart meters Net operator responsible for hardware Supplier responsible for data Regulation of process of transition Energy supplier market Services (e.g. feedback) based on smart meter data should be market driven Possibility for add-on modules to smart meter Supplier determines priority
Development of meter market in NL (2) Agreement on large scale implementation of smart meters in households is prepared by ministry of Economic Affairs and sector (expected 1 September 2006): Transition time Responsibilities in transition period Priorities
ESMA: European Smart Meter Alliance IEE Save project on smart metering: SenterNovem responsible for study on energy savings realised by different forms of feedback to consumers, especially: Long term development of savings Savings related to different forms of feedback Interest in field trials with smart metering and feedback to obtain data!

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Smart metering for households: cost and benefits for Netherlands

  • 1. Smart Metering for Households: Cost and Benefits for the Netherlands Hans-Paul Siderius SenterNovem, The Netherlands 1
  • 2. Overview of presentation Policy background: Energy Services Directive article 13 SenterNovem study on costs and benefits smart metering: Standardization Cost Benefit analysis Market Consultation Conclusion and discussion, including: Some developments in the Dutch energy market relevant for metering. IEE project ESMA.
  • 3. Policy background Energy Services Directive (2006/32/EC), article 13(1): Member States shall ensure that, in so far it is technically possible, financially reasonable and proportionate in relation to the potential energy savings final customers are provided with competitively priced individual meters that accurately reflect the final customers actual energy consumption and that provide information on actual time of use.
  • 4. Goal and set-up of SenterNovem study Cost benefit analysis of large scale introduction of smart metering for residential customers in the Netherlands. 3 parts: Study on standardisation smart metering (by NEN) Cost benefit analysis of large scale introduction smart metering (by KEMA) Consultation market players (by SenterNovem)
  • 5. What is a smart meter? woning display display trim consumption loggen logging 1234 1234 1234 1234 verwerken calculation 5678 5678 measurement 5678 5678 aansturen control switch on/off modem modem Electricity Gas
  • 6. Specifications smart meter Counter (kWh) Logging consumption and return delivery (PV!) per period Outages Internal clock 2 way communications Automatic meter reading (standard format) Switch on switch off possibility on distance Standard output for data
  • 7. Standardisation: conclusions Standardisation is essential, but NOT the only condition for large scale introduction of smart metering Good support by market players Incentive necessary from government as regulator: Definition of functionality smart meters (market will introduce standardisation)
  • 8. Cost benefit analys: base case and target case Base case Nulsituatie handmatige handheld handheld verwerking handmatige processing processing verwerking Database: standaard conventional meter -netoperator meter -supplier Target case woning display display kWh,m3, kWh, m3, netoperator Interface, Interface, smart gateway Database measuring measuring supplier meter protocol protocol
  • 9. Cost benefit analysis: result + 1,2 billion EUR Efficientere storingsafhandeling door slimme meter E Snellere storingsmelding door slimme meter E Effectievere aanpak wanbetalers door slimme meter G Effectievere aanpak wanbetalers door slimme meter E Snellere detectie van fraude E-meters (stroomdiefstal) Verschuiving elektriciteitsverbruik door vraagresponse Makkelijker switchen leidt tot meer concurrentie en prijsdaling G Makkelijker switchen leidt tot meer concurrentie en prijsdaling E Maandelijkse facturering energieverbruik door leverancier Effici谷nt verloop switchproces door betere meterstanden G Effici谷nt verloop switchproces door betere meterstanden E Vermindering klachten G via call center Vermindering klachten E via call center Besparing kosten jaarlijkse bepaling meterstanden Besparing kosten fysiek meteropnemen E+G Zuiniger gedrag bewoners t.a.v. gasverbruik Zuiniger gedrag bewoners t.a.v. elektriciteitsverbruik Inrichting infra t.b.v. terugkoppeling meetdata naar verbruikers Inrichten datacentra voor meetdata Inrichten data-infrastructuur via ADSL of kabel Inrichten data-infrastructuur via GSM/GPRS -60 -50 -40 -30 -20 -10 0 100 200 300 400 500 600 700 800 900 100 Inrichten data-infrastructuur via Power Line Communications (PLC) 0 0 0 0 0 0 0 Aanschaf en installatie slimme gasmeters MEURO
  • 10. Cost benefit analysis: + 1,2 billion EUR most important costs MEUR Purchase and installation smart meters (E+G) 798 Monthly billing energy consumption by supplier 437 Organization the data-infrastructure via PLC/internet/GSM 354 most important benefits MEUR Easier switching more price-competition reduction E+G price 1.353 Less complaining via call center 927
  • 11. Cost benefit analysis: Who pays, who benefits 4.500 4.000 costs 3.500 benefits 3.000 2.500 MEUR 2.000 1.500 1.000 500 0 s ld t r s r or en lie to e r o ce t ni ra ra eh pp m pa u pe pe rn us su od m ve to o ho pr co gy et ne go ln gy er g rin ca en er en e lo et m
  • 12. Cost benefit analysis: Sensitivity analysis Transition time (10 years) NPV (in M) 20 years 1.000 5 years 1.400 Meter (100% gas + electricity) Only 100% electricity meters 400 5% electricity - and gas meters 50 Reduction energy price (E -0,0025; G -0,0050) E -0,0010 EUR/kWh; G -0,0020 EUR/m3 414 E -0,0040 EUR/kWh; G -0,0080 EUR/m3 2.037 Data infrastructure (40%PLC, 40% internet, 20%GSM) 100% PLC 1.500 100% internet 1.600 100% GSM 0
  • 13. Cost benefit analysis: conclusions Net present value is positive, but: social cost/benefit analysis is not equal to a cost/ benefit analysis performed by an individual company Split incentives Benefit for each individual household small Discussion about benefits for households Expected reduction of energy prices? Expected energy savings by feedback?
  • 14. Market consultation: conclusions Market favourable on large scale introduction of smart metering ESD can be an impulse Definition of minimum requirements smart meters Shared starting points Energy company needs accurate data and on time Energy company prefers independency of net operator Conflicting starting points Open meter market Closed meter market
  • 15. Conclusions and discussion Smart metering for households has a positive cost-benefit balance. The market is favourable of large scale introduction. Discussion on: Metering market Feedback benefits for households
  • 16. Development of meter market in NL (1) Smart metering as standard infrastructure Standardisation of reading smart meters Net operator responsible for hardware Supplier responsible for data Regulation of process of transition Energy supplier market Services (e.g. feedback) based on smart meter data should be market driven Possibility for add-on modules to smart meter Supplier determines priority
  • 17. Development of meter market in NL (2) Agreement on large scale implementation of smart meters in households is prepared by ministry of Economic Affairs and sector (expected 1 September 2006): Transition time Responsibilities in transition period Priorities
  • 18. ESMA: European Smart Meter Alliance IEE Save project on smart metering: SenterNovem responsible for study on energy savings realised by different forms of feedback to consumers, especially: Long term development of savings Savings related to different forms of feedback Interest in field trials with smart metering and feedback to obtain data!